Sensex slides over 600 points as crude surge rattles markets

New Delhi: Indian equity benchmarks fell sharply in early trade on Friday as surging crude oil prices amid escalating tensions in West Asia raised concerns over inflation, corporate profitability and India’s import bill.

The BSE Sensex slid more than 600 points to 74,257.69, while the NSE Nifty dropped over 220 points to 23,255.10. Weak overseas markets and continued foreign investor selling also weighed on sentiment.

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Brent crude rose 0.95 percent to USD 108.7 a barrel, putting oil prices close to a level analysts warned could increase pressure on the Indian economy.

Hariselvan Radhakrishnan, Founder and CEO of HST Wealth, said Brent had reached its highest level since May as the US-Iran conflict continued to disrupt oil flows from the Middle East.

“For India, crude near USD 110 a barrel would further intensify pressure on inflation, the rupee, the current account and corporate margins, while reducing the scope for monetary easing,” he said.

Financial, aviation and industrial stocks decline

Bajaj Finance, InterGlobe Aviation, Mahindra & Mahindra, Tata Steel, UltraTech Cement and Axis Bank were among the major Sensex losers.

Tech Mahindra, HCL Tech, Infosys, Bharti Airtel and ITC traded higher despite the broader decline.

Asian markets also fell sharply, with South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng trading significantly lower. US markets had closed in negative territory on Thursday.

Radhakrishnan said elevated oil prices were weighing on global equities by fuelling concerns about inflation and the interest-rate outlook.

Ponmudi R, CEO of Enrich Money, said WTI crude was trading at USD 103–104 a barrel after gaining around 7.5 percent in the previous session. Escalating tensions involving Houthi forces and Saudi Arabia had also pushed Brent towards USD 108, he added.

The increase in oil prices could heighten concerns over India’s import bill, inflation and corporate margins, keeping investors cautious, he said.

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Foreign selling adds to weakness

Foreign institutional investors sold equities worth a net Rs 438.24 crore on Thursday, according to exchange data.

Friday’s early losses followed modest gains in the previous session. The Sensex had risen 138.36 points, or 0.19 percent, to close at 74,902.59 following late buying, while the Nifty gained 46.30 points, or 0.20 percent, to settle at 23,477.80.

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